Once mighty Noble Group faces insolvency protection after re-listing ban

Noble Group said on
Friday it will seek changes to its original debt restructuring
plan, with the spotlight now moving towards what the once mighty
commodity merchant has called the alternative: insolvency
protection.

In an unusually strong move, Singapore on Thursday issued a
joint statement by police, the Monetary Authority of Singapore
(MAS), and Singapore Exchange regulators that barred Noble from
re-listing on the local bourse, which was part of its end-game
strategy in a controversial $3.5 billion debt-for-equity
re-structuring plan.

The statement by Singapore authorities cited the start of an
investigation into Noble for potential improper accounting.

The commodity trader, which saw virtually all its stock
market value wiped out before trading was suspended on SGX in
November, said it had consulted its creditors and would take
steps to implement the restructuring by an "alternative
process", which may involve a court-appointed officer.

PLAN B?

Noble, Asia's biggest commodity trader at one time, said
Singapore's block to re-listing was a "very disappointing
development" and said it plans to restructure in forms other
than by re-listing in Singapore.

Noble did not specifically say on Friday it would seek
insolvency protection, but the company has openly warned this
year that if its $3.5 billionrestructuring plan fails, it would
begin insolvency proceedings, likely in Britain.

"Plan B is bad for shareholders and perpetual bond holders
as there is no listed entity that they can hang their already
thin hopes on," said Mak Yuen Teen, an associate professor of
accounting at the NUS Business School.

The re-structuring deal itself, one of the most complex
negotiated in recent years, has been highly controversial, but
it saved Noble from near-certain collapse.

Noble's troubles began after Iceberg Research questioned its
accounts in February 2015. To save itself, Noble has sold
billions of dollars of assets, including its core businesses,
taken hefty writedowns and cut hundreds of jobs, while defending
its accounting. The trader had a market value of $6 billion
nearly four years ago.

Under the proposed debt-for-equity deal, Noble's debt would
be halved. In return, Noble's creditors, made up mostly of hedge
funds, would own 70 percent of the restructured business, while
existing shareholders' equity would be reduced to 20 percent and
Noble's management would get 10 percent.

Dubbed "New Noble", the company wanted to transform itself
into an Asia-focused coal-trading business. It was looking to
list the overhauled business as part of the restructuring.

Singapore's regulator and authorities, though, took the
decision to block Noble's deal after reviewing the findings of a
probe, concluding that "there are significant uncertainties
about the financial position of New Noble".

Mak said the authorities' move was "unprecedented" but added
that there also had never been case as complicated as Noble's,
"where a restructuring with the proposed listing of a new entity
happens with such serious regulatory issues hanging around it."